Safe Water for Everyone

Business Model Innovation Can Make It Happen

More than a billion of the world’s people, usually living outside urban areas, have no access to safe water. The human costs are staggering: In India alone there are five million deaths a year from untreated diarrhea, $800 million in needless medical expenses, and a hundred million work days lost by people who can ill afford to miss even one.

Yet the lack of safe water is a problem that can be solved, and a team of researchers connected with Santa Clara University’s Global Social Benefit Incubator (GSBI) has been looking at some of the approaches taken by social entrepreneurs in the hope of setting forth a performance roadmap that others can follow.

“We chose water as a sector to study because it’s a huge issue,” says Jim Koch, William and Janice Terry Professor of Management at the Leavey School of Business. “There are lots of potential technology solutions, but many are not deployable, and little information exists on highly scalable solutions.”

The research findings are outlined in a working paper, “Safe Drinking Water for All: A Sector Review of the Opportunity for Community-Scale Social Enterprises,” which Koch co-authored with SCU law professor Al Hammond and Francisco Noguera.

Four critical issues underlie the safe water landscape: The nature of the water contamination challenges; technology solution options; business model alternatives — or effective strategies for organizational self-sufficiency and and scaling growth; and the boundary conditions posed by public policy in regard to a resource that is the source of all life.

In the paper, Koch and his co-authors look at three projects in India and one in Malawi in southern Africa. India is a particularly fertile field for study of safe-water issues because an estimated 400 million people are affected, and most of them live in villages of a few thousand — a large enough population to support an economically sustainable, small-scale water purification system.

A village could be served by a range of systems, ranging from the elephant pump (a 2,000-year-old design with a pour spout that resembles an elephant’s trunk) to natural geological riverbank filtration systems, and the most modern and robust reverse osmosis systems, which purify water from any source through fine membranes to filter out contaminants.

All these systems require capital to build and a sustainable operating basis, but the investment is reasonable. Koch says a reverse osmosis water system for a typical size village of 3,500 people can be constructed for as little as $7,000, or about $2 per person. With membrane patents expiring and scaled implementation, costs could be even lower.

Koch says that a variety of business models are available to provide safe water supplies, ranging from micro-financed rope pumps to co-op systems with community ownership; from hybrid models that combine grants with fee-based operations, to pure for-profit operations or nonprofit models that rely on continued grant funding. The problem with grant-based solutions has been maintenance, so there is a growing moral and ethical consensus that charging for purification, storage and transport to ensure reliable access to safe water is a fair area for business activity.

“Water is seen as sacred, the source of all life, and as a public good that belongs to everyone,” he says. “But the treatment, storage and distribution of it are seen as services for which charging money is acceptable to achieve an economic solution to this growing problem.”

An example is the Naandi Foundation in India, which operates on a sustainable-fee basis, though its growth is funded as part of its not-for-profit mission. Already it is providing water to 1.5 million people in India at an average cost of a penny per person per day, or $18 a year for a family of five. It projects that within a few years it can grow from its current 300 systems to 4,300 systems serving 15 million people.

“If you have a proven business model, you could catalyze work in a sector like safe water by demonstrating a path to sustainability at scale that can serve as a benchmark for other technology options and potential service providers,” Koch says. “Social entrepreneurs are pathfinders. What’s needed next is to build on their efforts so that access to safe water can be provided in our lifetime.”